Accessing government crisis funds, helping nonprofit staff, and what to advocate for now
There are increasingly good resources for how nonprofits can access federal funds and other federal-level resources, from organizations such as the National Council of Nonprofits, Nonprofit Quarterly, and field-based organizations like Americans for the Arts. We have started collecting them on our own resources page, but we’ve been getting similar questions from so many California nonprofits that we want to offer a few responses.
How do we access emergency government dollars for nonprofits to cover payroll and other “overhead” expenses?
- Federal: The new CARES Act includes several provisions that will result in funding for nonprofits, in addition to the expanded Small Business Administration loan programs described below. You can find an analysis of the CARES Act here. The Act provides $150B for a state, tribal, and local government Coronavirus Relief Fund. Some of those dollars (some sources estimate $15B) will come to California, although we do not know yet how those funds will be distributed.CalNonprofits will be advocating at the state level to ensure that nonprofits get a significant portion. (We have already begun gathering data to estimate the economic impact of COVID-19 on California nonprofits.) Nonprofits may also be able to benefit from the Industry Stability Fund included in the Act, but it is currently unclear whether we qualify. Our national nonprofit advocacy groups are pushing hard to get nonprofits included and will update us with new information as they have it, which we will share with you.
- U.S. Small Business Administration (SBA) loans that are available to nonprofits include:
- The Disaster Assistance Program or Economic Injury Disaster Loan (EIDL) Program offers low-interest loans to nonprofits of all sizes in declared disaster areas. This program does not allow loan forgiveness; the interest rate for nonprofits is 2.75%. These loans of up to $2M may be used to pay payrolls, accounts payable, fixed debts, and other bills that can’t be paid because of the impact of COVID-19. The new federal CARES Act expands this program to include an emergency advance, pending a loan application, of up to $10K that the SBA must distribute to the nonprofit within three days. The COVID-19 EIDL application is here.
- The 7(A) or Paycheck Protection Program (PPP), provides loans of up to $10M to nonprofits with no more than 500 employees. These loans can cover expenses incurred between February 15 and June 30, 2020, for payroll, health benefits, rent, interest on mortgages, utilities, and fixed debts. Interest rates are capped at 4%, but portions of the loan (payroll, rent, interest on mortgages, and utilities) can be forgiven, turning the loan into a grant. The amount forgiven, up to 100%, depends on the extent to which the nonprofit retains employees through June 30. A sample application is available here. An online application process is not yet available but should be very soon. In the meantime, please contact your local SBA bank and ask them for information about how to apply.
- California Senate Bill 89: This bill, enacted on March 17, authorizes up to $1B in state emergency funds for COVID-19. The bill states that assistance strategies to be included in the Budget Act of 2020 must help nonprofit organizations (as well as individuals and small businesses) experiencing economic hardships due to COVID-19. CalNonprofits is working with lawmakers and with other nonprofit advocates to ensure that the needs of nonprofits are addressed through this bill and through the 2020 state budget process. Right now the best ways to support these efforts are at the end of this bulletin.